♪ >> announcer: this is "nightly business report" with tyler mathisen and sue herera. with consumers changing, does coca-cola need to do something really, really big? not so scary. why october is turning out to be a pretty good month for stocks, so far. flu breakthrough? how close are we to creating a universal vaccine that protects against all strains? find out in the final part of our series on the big business of fighting the flu, tonight on "nightly business report" for wednesday, october 21st. >> good evening, everyone, and welcome. so glad you could join us. well, the bluest of the blue chips are out with earnings tonight. day we heard from three different dow components. they operate in three very different sectors of the economy. they are as global as any

companies can be and as all-american as they come. coke, boeing, and late today, american express. and that's where we begin. the financial services company struggling since its exclusive relationship with cosco was broken off earlier this year and today it posted disappointing results. earnings per share came in at $1.24, and that was a full 7 cents below estimates. revenue for the quarter also missed, and it was down about 1% from a year ago, and that pressured shares initially in extended-hours trading, as you see there. mary thompson has more on american express's results. >> reporter: well, american express is spending more to get new business, and that hurt its bottom line in the third quarter. the electronic payment giant's profits falling over %, hurt by higher spending on growth initiatives, the impact of a stronger dollar and money spent to renew co-branded relationships. with its exclusive deal to be the lone credit card accepted in costco stores expiring next

year, amex expanding more on products that would widen its base and portfolio. as a result, the firm is expecting an uneven earnings performance in the quarters ahead, thanks to higher spending and an uneven economy. still, it's maintaining its outlook for positive earnings growth next year and earnings growth of 12% to 15% in 2017. for this year, though, it is expecting profits to decline between 4% and 6% from last year. for "nightly business report," i'm mary thompson. now to boeing, which saw profits climb 25% on record deliveries of its commercial jets. the world's largest aerospace company said the backlog of orders is solid and it lifted its financial guidance for the year. the big source of concern for wall street had been the cost of its flagship 787 dreamliner, but boeing said those costs are on track to decline, and that sent shares higher in trading today. a different story for dow component coca-cola. the company said revenue fell more than expected in the third quarter. the strong dollar is partly to

blame. coke gets a ton of sales overseas, and those non-u.s. sales convert back into fewer dollars when the buck is buoyant. and coke said the strong dollar will likely squeeze its revenue for the full year. and that sent shares lower today, as you see there. with sales struggling and consumer tastes changing, some are starting to think about the future of this all-american brand. >> reporter: no matter how you spin it, coca-cola's latest earnings report is less than fizzy. and maybe that's fitting for a company best known for soda that's now leaning more on its still beverages, like water and tea, where volumes grew 6%. yes, earnings were slightly better than expected, but those profits were down more than $500 million from last year. revenue worse than thought, down more than 4.5%. the company makes most of its money outside of the united states and says a strong dollar will put a 7% dent in revenue for this year. that's a full percentage point

lower than it was expecting back in july. with the dollar stabilizing some in recent months, continued cost-cutting and a streamlining of its giant bottling and distribution business, some analysts hope coke's outlook will improve. >> remember, coke is characterized 2015 as a transition year, and that's exactly what we've been seeing this year. so, we're optimistic that in 2016, they're going to start getting some momentum on volume, price and on earnings. >> reporter: still, full-calorie soda consumption is down more than 25% over the past two decades, and the company just reported that diet coke sales for the third quarter were down 8%, worse than expected. coke just became the second american icon in less than a week. ibm was the other. to post less-than-stellar earnings. coke's stock roughly flat for more than two years. so, what's next? could coca-cola possibly be someone's deal partner? could an activist investor get

involved? warren buffett is coke's biggest shareholder, so maybe that's hard to imagine. then again, think about anheuser-busch and sab miller, or kraft and mondelez. big, transformative deals do happen, and sometimes they surprise. >> joining us now to talk more about coke and whether it needs to do something big is ally debage, senior analyst at sanford bernstein. welcome. thanks for being with us. >> thanks for having me. >> talk to me about the future of coke. you know, ty's piece just left off with, you know, big deals maybe need to be done. is that the case for coke or no? >> i think there's certain things they can do structurally. i think one of the big things they are doing and they have to do is get out of the distribution system, right? they have to get rid of their bottlers. that's something they're starting to do slowly. we would like them to do a little bit more. but you know, they are a branding company. they should stick to branding. that's one of the major things they should focus on. >> what can get the stock going? is it the kind of stock that an activist might target, like

dupont or like a ge? >> look, there are many things the company can do, and an activist could push for. i always wish the companies would move faster than they do move. that's my nature. so, i think there is a possibility that an activist gets involved. a big shareholder is warren buffett, berkshire hathaway owns 10% of the company, so you have to get some implicit understanding that warren buffett is behind you on this, but there are certainly things the company can do to accelerate improvement and get the stock to work. >> other than getting rid of bottling units, what else would you like them to see or to attempt? >> yeah, so, the three main things. one is becoming much more price-rational. give them credit, they're starting to do that. it's something they resisted when we wrote about it and pushed them to do for many years. they're finally becoming price rational. there is not a lot of elasticity on carbonated soft drinks. believe it or not, you could take prices and not a lot of volume goes down, so that's something they should push for and they're continuing to do that. secondly when you realize your top line isn't going to grow as

fast, you're not as much of a growth company, you have to cut costs. that's something they're doing, announcing a $3 billion cost-cutting plan last september. perhaps an activist could push them to do more of that. and finally, refranchising the bottling could happen much faster. >> is mutar kent there for the long haul? >> say that again? >> is mr. kent there for the long haul, the ceo? >> it's up to him. he's clearly cleared the team around him. there's a new coo, chief marketing officer and new head of north america, so he's built up the team around him to hopefully deliver on these numbers, and if he does, i think he's around to 2020, which is the vision he's laid out. >> ali, if i'm an investor and i hold coca-cola's stock right now, what do i do? >> we're recommending -- actually, this is a good opportunity. clearly, one of the pressures they're facing is macro emerging market pressure from a currency perspective. we believe that's giving investors a good opportunity to step into this name right now, seeing the changes that they're

under going from a pricing perspective, from cost-cutting, from refranchising, and that valuation relative to history isn't that bad, so we like the stock here. >> do you prefer coke or pepsi? i don't know whether you follow pepsi. >> we follow pepsi closely. coke took over pepsi as our number one pick, really because pepsi's kind of laid the groundwork of what you should see from one of these companies -- cutting costs, taking pricing, doing things in a world where it's a little bit more difficult making tough decisions. coke is just starting on that path, so it overtook coke as our number one pick right now. >> ali, thank you for spending time with us. a record performer dow component general motors, strong demand for trucks and improved profit margins in china helped them top forecast. cost cuts and improved sales in north america offset costs related to recalls. >> a strong truck market, a strong suv market is helping, but i think also it's our view and our continued focus on driving cost efficiencies. and if you look at the material performance and the cost

efficiencies that we had in the third quarter, overall about $700 million, a lot of that accrued to north america. so, i think it's seizing the opportunities from a market standpoint, but also continuing to drive efficiency in the business. >> europe and south america remain trouble spots for the company, but investors shook that off and sent the stock up nearly 6% today. consolidation in the semiconductor sector is heating up. today two deals worth about $30 billion total were announced. western digital plans to buy sandisk for nearly $20 billion, increasing its presence in the market for chips used in smartphones and tablets. shares of western digital fell. sandisk rose. and semiconductor equipment-maker lam research has agreed to buy rival kla-tencor for about $10 billion. both rose with kla soaring 18%. josh lipton tells us why this sector is a hotbed of deal-making activity and which companies may be next.

>> reporter: the rate of consolidation in the chip space is fast and furious. lam research's acquisition of kla-t kla-tencor and western digital's takeover of sandisk are just the latest deals in the semiconductor industry this year. in may, avago said it would buy broadcom for $37 billion. in june, intel agreed to buy augtera for $17 billion. in all, chip companies have already announced $104 billion in m&a this year, according to deallogic. last year, in total, it was $38 billion. the chip market is an increasingly mature industry, where there is a lot of competition and growth is harder to come by. that's why financial analysts say consolidation is the right strategy. >> it's the right move because the organic growth is almost impossible to achieve today, given that things are growing at a slow growth rate, but you still need to massively invest

in your business, you still need to create new chips, you still need to build new facilities to manufacture those chips. >> for investors, one question is this -- which are the next acquisition targets? the team at b. riley highlights three names to watch -- integrated device technology, intersill and cavium, companies that they argue all boast valuable technologies and competitive mothers. they say the trend of consolidation will continue in the chip sector. big players like intel and texas instruments, she says, need to get bigger, while smaller companies will find it increasingly tough to compete on their own. for "nightly business report," i'm josh lipton in san francisco. on wall street, the major indexes closed near their lows of the session, dragged down by concerns over earnings. the dow jones industrial average dropped 48 points to 17,168. nasdaq down 40. s&p 500 dipped 11. and despite the pullback today,

stocks have moved higher in october so far. look at those numbers. gains of roughly 5%. seema mody tells us why this month is bucking the historic downtrend for stocks. >> reporter: it was supposed to be a scary october, but so far, this month hasn't been terrifying at all. the s&p 500 is up nearly 6%, and earnings, a mixed bag of tricks so far, haven't weighed down stocks. so, what's behind the rebound? thank the fed and china. >> that uncertainty about the fed has been pushed off until next year, like it or not. i don't, but that's the case. and the other is china and the economic data of china has stabilized. >> reporter: another crucial part of the market's rally is oil, holding above $40 a barrel, helping energy stocks out-perform, and so far, energy is the best performing sector this month. but the big question mark hanging over markets is just how they'll react through the rest of the earnings season. >> any stability in oil prices

is going to be very supportive for an index that has been plagued by persistent declines in the commodity price over more than a year now. >> reporter: showing growth of little more than 4% so far, earnings have been underwhelming. even those beating estimates have been showing a drop in sales growth, that according to thomson reuters. and tech earnings kick into high gear tomorrow. google will report for the first time since announcing the creation of alphabet in august. also due to report, amazon, microsoft, as well as fast-food giant mcdonald's. experts say disappointing earnings from these multinationals could still change the direction of the market. for "nightly business report," i'm seema mody. coming up, why it's getting very expensive for companies to protect themselves against a growing threat.

shares of ferrari got off to a racing start. the luxury sports carmaker began trading on the new york stock exchange after pricing at the top of the range. ferrari and fiat's chairman was pleased with the strong demand for the offering and discussed how he can grow demand for his cars. >> we need to grow the demand side before we climb supply, and they really destroy the exclusivity of the brand.

it's a very careful walk and a very, very tight relationship between us and the dealer body. >> shares of ferrari rose more than 5%. bob pisani tells us why this ipo is different from some of the others we've seen recently. >> by all accounts, it was a very respectable ipo for ferrari, and here it is right here, but it has nothing to do with the recent ipo market. ferrari's an anomaly, a very unusual ipo. in the last four weeks, there's been 14 ipos, according to renaissance capital. of those 14, only 2 priced within the expected range. not a single one priced above the price talk. on average, those 14 priced 22% below the midpoint of the price talk. that's a big decline. but this has been good news for investors because those that have been priced have been doing better. it's buy low, sell high, after all. the average ipo that has gone public in the past month is up about 11%. so, why is ferrari a special case? it goes to what matters with ipo

pricing. first is the sector, the luxury lifestyle sector. big names like besh erie have stock multiples and margins higher than the general market, but the most important factor is the uniqueness of the ferrari product. ferrari oozes sex appeal, and the company has a very close relationship with its customers, including owners clubs. that breeds a lot of loyalty and goodwill. the question now is whether they can expand production and maintain that goodwill and the healthy profit margins. for "nightly business report," i'm bob pisani at the new york stock exchange. ebay tops earnings expectations. the stock takes off initially in after-hours trading, and that is where we begin tonight's "market focus." the quarterly results were the first for the company since it spun off its paypal unit. ebay's marketplace businesses performed well, merchandise volume climbed, and its active buyer base grew. shares climbed initially after the report in the regular

session, they were lower slightly at $24.21. texas instruments saw more growth in the core business unit as overall revenue for the company declined because of weak demand. shares initially rose on the report but closed lower at $51.90. tupperware brands reported better-than-expected quarterlies, profit and sales. the food container-maker was helped by strong results in emerging markets like brazil, china and indonesia. shares rose more than 8% to $59.81. and the biotech company biogen says it will cut about 11% of its workforce. the cuts are part of a companywide restructuring to save about $250 million a year. biogen also reported third-quarter results that topped expectations, and that news sent shares up nearly 4% to $276.34. st. jude medical lowering its full-year earnings guidance. the company says the strong dollar will continue to have an impact on sales. it also blamed the weak outlook in part to a delay in approval

for a new pacemaker device. shares of the devicemaker fell nearly 9% to $62.30. and consumer review site angie's list reported a rare quarterly profit, its first profitable third quarter ever, but the company also lowered its full-year guidance and cited a one-time expense associated with finding a new ceo. shares of this small-cap stock rose more than 11% to $6.94. i.t. management company solar winds is selling itself to two private equity firms. that transaction has already been approved by the company's board, and it is expected to be completed in early 2016. shares of the company surging 16% to $58.31. and late today, visa's board approved a 17% hike in the company's dividend to 14 cents a share. the dividend will be paid december 1st to shareholders of record on november 13th. visa shares rose slightly initially and after-hours trading. it closed down 1% in the regular

session to $75.46. well, companies want to protect themselves from a growing threat, cyber attacks. and to do that, according to a new report, they snapped up cyber insurance in the first half of the year, and it didn't come cheap. mary thompson has our story. >> reporter: with cyber theft on the rise, so, too, is demand for cyber insurance. insurance broker marsh saying in the first half of this year, the number of its u.s.-based clients buying this protection increased by 32%, a trend bob parisi sees no signs of slowing. >> i would expect it to increase even more next year. >> reporter: in its benchmark "in trends" report, marsh announced a familiar reason for the increase, an increase in cyber attacks. along with new clients, the report says many of marsh's existing customers increase their limits on existing coverage, even as pricing increased, especially in industries like retail that have been recent targets of cyber thieves. the sector adding insurance at the highest rate? higher education. a smart move, according to

parisi. >> they have all the information that a large bank, a large retailer, a large health care provider has, so they really have a perfect storm from the point of view of holding confidential information. and i think they're finally realizing that they're not finding coverage for that risk anywhere else. >> reporter: power firms and utilities doubled their purchases of cyber insurance in the first half of the year, a level almost matched by manufacturing companies. the industry with the highest percentage of coverage, though, is health care. 41% of marsh's clients in this sector have cyber policies to cover costs linked to attacks on their clients' sensitive data s. higher demand leading to higher prices. on average, clients paid 19% more for cyber insurance this year than last with sectors that have been hard hit by this crime wave, like retail and health care, seeing increases almost double that amount. a developing industry, marsh says the industry's capacity is being tested, and this means some firms have difficulty finding coverage, or it's forcing them to reduce or change

the coverage they get for business interruption, scrubbing their systems, and client care after a breach. firms also looking at ways they can better protect their data, insuring in other ways that their clients' information is safe. for "nightly business report," i'm mary thompson. coming up, the quest for the holy grail of the flu. a universal vaccine. the final part of our series on the big business of the flu is next.

here's a look at what to watch tomorrow. another big day for earnings. the dow components 3m, caterpillar, mcdonald's and microsoft are due out. on the tech front, we will hear from amazon.com and the google parent, alphabet. economic data include existing home sales and jobless claims, and that is what to watch tomorrow. espn to lay off about 300 employees. the disney-owned network is cutting jobs as part of an organizational change. the network is facing rising programming costs, slowing growth, and it's also under pressure from viewers who are migrating online. a very rough day for shares of valiant the pharmaceutical company which has been at the center of the drug pricing debate. saw its shares plunge after an influential short seller accused the company of inflating its

revenue by creating phantom sales. serious charge. valeiant denies the allegation. shares fell as much as 40% midday, but they did climb back a bit to close about 19% lower. shares of health insurers fell today after democratic presidential candidate hillary clinton said she had "serious concerns" about etna's plan to acquire huma and anthem's bid to buy cigna. in a statement, she said she would like to see the multibillion dollar deals closely reviewed by regulators and she's skeptical it would be good for people. many are attributing those comments for the decline in shares. roll up your sleeves, folks, it's time for your flu shot. but if you plan to get it, you will not be protected against all of the different mutations of the virus. in the final part of our series, meg tirrell looks at the cutting-edge work being done to create a vaccine that protects against all the strains of the

flu. >> reporter: scientists call it the holy grail of flu, the quest for universal flu vaccine has been decades in the making. why aren't we there yet? the flu virus is tricky, possessing an ability to evade the immune system like few others. >> influenza is a very interesting virus that has the ability and frequently changes a bit from year to year, not dramatically, but just enough to make the vaccine that you may have had the previous year not the perfect fit. >> reporter: researchers call that drifting of the virus, and it's what made last year's vaccine so much less effective. now, public health officials make an educated guess every year about which strains will be in heaviest circulation during flu season. a universal vaccine, they say, would make that unnecessary. and recent research suggests we may be getting closer. the flu virus has proteins on its surface shaped like a bulb with a stem. the bulb is the part that the

immune system recognizes, but it's also the part that can change from season to season. the new approach is to focus on the stem, which doesn't change as much, explains dr. anthony fauci, director of the national institute of allergy and infectious diseases. >> if we can successfully induce a response against that stem part of that protein, we're going to be very close to developing a universal flu vaccine. >> reporter: so, what would that mean for the business of flu shot-makers? it's an estimated $4 billion global market annually. both sanofi pasteur and glaxosmithkline are among those working on universal vaccines. sanofi says the most likely near-term product will be a broadey spectrum vaccine, and glaxosmithkline points out, that market opportunity is one any vaccine-maker would want. >> the first company to make a universal flu vaccine would make a fortune because they would grow the market share in a market that's highly

commoditized and charge appropriately a premium for the vaccine and impact public health in a very positive way. we're investing a lot to have that. >> reporter: dr. fauci of the nih says the universal vaccine may be five to ten years away. for "nightly business report," i'm meg tirrell. >> a little chill. to read more about the big business of the flu, head to our website, nbr.com. get your shot. >> i just don't like the close-ups of the vaccines. that does it for us tonight. thanks for joining us. i'm sue herera. >> thanks from me as well. i'm tyler mathisen. we'll see you back here tomorrow night.

announcer: the following program contains mature content which may not be suitable for all audiences. viewer discretion is advised. ah, camillfortescue- cholomondeley-browne? yes. come in. i generally answer to chummy. you can ride a bike? i can ride a horse. that can't be so very different, surely. woman: miss, could you change a £5 note for me? people like you are supposed to help people like me. chummy: it would seem, betty, as though your baby is presenting in the breech position. you what? it's coming out ass first. mrs. fraser: that's bad. announcer: funding for "call the mie" is provided by contributions to your pbs stations from viewers like you. thank you.